Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) reported major progress on sales of its Lumia devices in its third quarter report this morning. The company reported 8.8 million Lumia handsets sold during the September quarter. It also reported plans to move its Devices and Services division to discontinued operations for the next quarter, thus boosting margins.
Shares of Nokia’s stock rose more than 6% in premarket trading after the report was posted.
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Nokia posts strong results
Operating profits during the most recently completed quarter were €118 million, while revenue was €5.66 billion. Reported losses were €.02 per share. These gains are significant sequentially because in the previous quarter, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) reported €115 million in losses. In the third quarter of last year, the company reported losses of €564 million.
Analysts had been expecting Nokia to report earnings per share of zero cents and €5.9 million in revenue.
Nokia reports record Lumia sales
During the September quarter, Nokia reported that it sold 8.8 million Lumia handsets. That’s a new record and a nice increase sequentially and year over year. In the previous quarter, the company sold 7.4 million Lumia handsets, while it sold just 2.9 million of them in the same quarter a year ago.
Net sales for the devices division rose 6%, and the company cited strong demand for the low-end Lumia 520. Mobile phones volumes also rose 4% sequentially, climbing to 55.8 million units and demonstrating solid performance across all of Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s new devices, particularly the newly launched Nokia 210, Asha 501 and Nokia 105.
This was the first earnings report since Nokia announced that Microsoft Corporation (NASDAQ:MSFT) would buy its Devices and Services division. This is a huge win not only for Nokia, but also for Microsoft, which looks a little less crazy for buying the losing division. The company still posted a loss on handsets, however, reporting non-IFRS operating margins of negative 1.6%.
Nokia’s other results
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) also reported underlying operating profitability for the fifth quarter in a row, led by Nokia Solutions and Networks (NSN) and HERE maps. It posted a third quarter non-IFRS operating margin of 3.8%. The company also ended the quarter with a strong balance sheet, including gross cash of €9.1 billion and net cash of €2.4 billion.
NSN posted underlying profitability for the sixth quarter in a row with a non-IFRS operating margin of 8.4%. HERE’s operating margin was 9.5%. Sales for both divisions fell sequentially, however. NSN’s net sales declined 7% to €2.6 billion, while HERE’s net sales fell 9$ to €.2 billion. The company cited seasonality as the main cause for the decline.
Looking ahead to Nokia’s next quarter
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) said starting with the next quarter, it plans to report its Devices and Services revenue as discontinued operations. The company said this was subject to shareholder approval of the sale of the division to Microsoft Corporation (NASDAQ:MSFT). It also said that if it would have reported this business as discontinued operations in the most recently completed quarter, net sales of continuing operations would have been €2.9 billion, although operating margin would have been 11.5%–significantly higher than the actual reported margin of 3.8%.